School Finance, Tax Reform, & a Veto Pen

School Finance Passes on Second Try

Yesterday saw the consideration of two school finance plans. The first was created from the conference committee work on HB 2168. The House put tax policy in the bill. Three provisions were included: the establishment of three income tax brackets, the repeal of the glide path to zero, and the repeal of the LLC loophole. Additionally, the bill would direct all state income tax receipts to K-12 education in Kansas. Under this, all other state services would have to be funded with sales and excise taxes and fees.

This bill also required a “trailer bill” (CCR SB 30) that included other tax provisions many of which lowered the income tax receipts possible under the change in brackets. The revenue raised in the bill was lower than other tax bills considered this year.

KNEA, along with other education organizations, opposed the bill (contained now in CCR SB 19). This bill failed on a vote of 32-91 and was sent back to the conference committee. Since the tax trailer bill was tethered to the school finance bill through a provision that assured if one of the bills failed, they both failed, there was no need to then vote on the trailer bill.

Back in the education conference committee, the income tax changes were stripped out of CCR SB 19 and it was sent back to the floor as a school finance bill only. With the tax policy stripped out, the report was adopted in the House on a vote of 67 to 55 and later in the Senate on a vote of 23 to 17.

KNEA believes that the education finance bill that passed is not likely to meet constitutional muster because the funding is not adequate and because there are several provisions which may be considered by the court to be disequalizing. Additionally, the bill expands the tuition tax credit program diverting state money to private schools. We know that many legislators voted against the bill for these reasons; others voted against it because they have no interest in increasing funding for schools. We also know that many legislators who agree with us on the above issues also voted for the bill because they firmly believe at this late date something must be sent to the court for review. They are counting on a court ruling to move more legislators to support a better plan perhaps in a July special session.

Tax Bill Finally Passes; Governor Vows to Veto

After the failure of the tax/school combo bill, the tax conference committee met and assembled a new tax plan (again in CCR SB 30) that restored the three income tax brackets at higher levels than now but lower than 2012, repealed the glide path and the LLC loophole, and phased back in to law some of the family-friendly deductions (medical care, property taxes paid, mortgage interest, child care) over several years. This bill raised significant new revenue – about $600 million per year – and helped Kansas families. KNEA, AFT, Kansas Action for Children, the Kansas Organization of State Employees, the Kansas Center for Economic Growth, and other allies in Rise Up Kansas threw their support behind the tax bill.

The stand-alone tax bill (CCR SB 30) was ultimately adopted by the House on a vote of 69 to 52 and then by the Senate after midnight on a vote of 26 to 14. We were delighted that a good tax plan was finally adopted but of course, there is still one more hurdle – the intransigence of the man on the second floor.

It wasn’t long before Governor Brownback let it be known that he would veto CCR SB 30. We expected this. After all, Brownback has invested much of his tenure in destroying the tax basis of Kansas, starting with the reckless and irresponsible tax cuts of 2012.

Legislators and Kansas voters know it is time to get the state’s fiscal house in order. In August and November of last year, voters threw out many of the most vocal supporters of the Brownback experiment, replacing them with moderate Republicans and Democrats. Despite Brownback’s lame duck status and persistent rumors of his pending appointment to a position in the Trump administration, he vows to leave the state in fiscal collapse. And sadly, it appears that some in the Legislature are okay with that.

At this time, after six years of falling revenue, after 19 rounds of cuts to state services from universities to K-12 education to public safety, roads and highways, and the social service safety net; after multiple credit downgrades; after putting the state in massive debt through bonding and skipping payments to KPERS, it is time to turn this ship around. It is time to get on the path to fiscal stability.

The Kansas House and Senate must stand up and override the Governor’s veto of CCR SB 30. If they do not, they risk the closure of public schools on July 1.

We need every Kansan who cares, to contact their Representatives and Senators and call upon them to override the Governor’s veto of CCR SB 30.